Mineral Resources Ltd (ASX: MIN), a leader in diversified resources, has struck a $1.1 billion agreement with Gina Rinehart’s Hancock Prospecting to accelerate gas exploration across two of Western Australia’s most promising regions: the Perth and Carnarvon Basins. In a pivotal move for both companies, the deal will see Hancock purchase two of MinRes’ prime exploration permits while co-funding extensive joint ventures aimed at unlocking large-scale domestic gas supplies, a resource anticipated to fuel the energy needs of WA’s booming industries for decades.
Under this multi-faceted agreement, Hancock will pay MinRes $804 million upfront for 100% ownership of Exploration Permits (EP) 368 and 426 in the Perth Basin. Additionally, Hancock has committed to further conditional payments based on exploration results, which could boost the total transaction value by another $327 million. This bold partnership builds on both companies’ existing relationship and underscores their shared vision of propelling WA’s resource sector into a new era of domestic energy production.
MinRes CEO of Energy Darren Hardy emphasised the strategic importance of this deal, stating, “This transaction maximises the value of our exploration success for shareholders and again showcases our ability to unlock significant capital from MinRes’ portfolio of assets. The new exploration joint ventures with Hancock in the Perth and Carnarvon basins immediately de-risk and accelerate our future exploration programs across this highly prospective onshore petroleum acreage.”
A Closer Look at the Deal Structure
The financial dynamics of the MinRes-Hancock agreement reflect a complex, performance-based structure that aligns both companies’ interests in driving exploration success while minimising capital expenditure risks:
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Upfront and Contingent Payments: Hancock’s initial $804 million payment secures full ownership of EP 368 and EP 426. On top of this, Hancock may pay MinRes up to $327 million in additional contingent payments, tied to the successful delineation of gas and oil resources across multiple prospective sites.
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Moriary Deep Prospect: One of the deal’s primary targets is the Moriary Deep Prospect, where MinRes expects to confirm a 2C contingent gas resource of 89 billion cubic feet (Bcf) or more, beginning with drilling at the Moriary-2 well in November 2024. If results meet expectations, Hancock will provide a $200 million payment, plus $22 million to cover drilling expenses. This payment scales down if lower gas volumes are confirmed but will be nullified if the resource is less than 30 Bcf.
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Lockyer Gas Project: Located close to the existing North Erregulla Deep-1 discovery, Lockyer Gas represents another potential windfall. Hancock has agreed to pay $2 per gigajoule (GJ) for up to 37 petajoules (PJ) of gas if drilling confirms additional resources, amounting to a maximum consideration of $74 million. Hancock will split drilling costs for the Lockyer-6 well with MinRes, capped at $11 million, with completion targeted by May 2025.
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Erregulla Oil Discovery: Hancock will also contribute an additional $20 million if drilling results in the Erregulla field confirm a contingent resource of 30.6 million barrels (MMbbl) or more, with scaled payments for volumes between 18.6 MMbbl and 30.6 MMbbl. This discovery includes conventional oil finds across three sandstone layers within EP 368 and EP 426, as currently defined by earlier wells.
Expanding Exploration Through Joint Ventures
The agreement also establishes two unincorporated 50:50 joint ventures (JVs) covering MinRes’ remaining acreage in the Perth and Carnarvon Basins, effectively pooling resources to push high-priority drilling and seismic programs forward. Under the JV terms, MinRes will operate the exploration projects, leveraging its extensive experience in Western Australia’s resource sector, while Hancock’s financial backing will enable accelerated progress on high-potential targets. In a boon for MinRes’ operational cost structure, Hancock will also purchase 50% of MinRes’ existing exploration equipment, valued at $17.6 million.
For the Carnarvon Basin, Hancock has committed an immediate $6 million to kickstart exploration, covering both onshore and offshore drilling targets and 3D seismic surveying. This capital will support the first phase of operations, with both companies to share ongoing costs once Hancock’s contribution is exhausted. Notably, should any commercial discoveries emerge from these JV projects, Hancock will cover 100% of the post-final investment decision (FID) costs for developing upstream and midstream processing facilities, with MinRes’ interest carried at a commercial interest rate.
Strategic Implications for MinRes and Hancock
This deal represents a decisive step for both companies in diversifying their portfolios and strengthening their roles in the domestic energy market. By bringing Hancock onboard, MinRes gains a financial partner with the capital and commitment to support long-term exploration efforts, while retaining a foothold in the high-upside projects without bearing the full cost burden.
MinRes initiated the deal after fielding substantial interest from both local and international firms, indicating a growing appetite for WA gas assets amid an escalating focus on domestic supply security. The deal allows MinRes to monetise its exploration investments, a critical move for a company with a history of strategically reallocating capital to boost shareholder returns. Moreover, Hancock’s commitment to WA’s energy infrastructure highlights its intent to play a pivotal role in the state’s evolving energy landscape, which increasingly values local gas production as a hedge against fluctuating global markets.
Operational Timelines and Next Steps
With Hancock’s backing, MinRes is preparing to drill high-priority targets at both Moriary Deep and Lockyer over the next six months, projects that could yield substantial returns if resource volumes align with early indications. The Moriary-2 well is expected to start drilling imminently, followed by the Lockyer-6 well in early 2025. These projects represent just the beginning of a series of exploration initiatives under the MinRes-Hancock partnership, which both companies anticipate will deliver strong production potential within the next few years.
MinRes’ ability to bring on Hancock as both a buyer and JV partner underscores its track record of value creation and collaboration on top-tier assets. This agreement not only accelerates MinRes’ exploration timelines but also de-risks its capital exposure in two highly prospective basins. Meanwhile, Hancock gains immediate exposure to established exploration grounds, tapping into MinRes’ operational expertise and a portfolio primed for resource development.
For shareholders, the transaction provides immediate value while retaining MinRes’ operational role and future upside in one of Australia’s most promising energy regions. With energy markets in flux, the deal places MinRes and Hancock in a strong position to respond to both domestic demand and potential export opportunities, positioning them as key players in WA’s energy future.
